San Jose's urban planning strategy is built around mixed-use development. The city's General Plan designates 68 urban villages as targeted growth areas where walkable, transit-oriented, mixed-use communities are encouraged with flexible zoning that supports housing, retail, offices, and public spaces in integrated settings. With transformative projects like Google's Downtown West, BART extensions, and state legislation like SB 79 overriding local zoning to allow greater density near transit, mixed-use development is not just encouraged in San Jose; it is becoming the dominant form of new construction.
For investors, developers, and property owners, understanding how to finance mixed-use properties in Silicon Valley's largest city is essential. Whether you are acquiring an existing mixed-use building, developing a ground-up project near a transit station, or repositioning a commercial property into a live-work-play destination, this guide covers the financing landscape for San Jose mixed-use properties in 2026.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
What Types of Mixed-Use Loans Are Available in San Jose?
Mixed-use properties combine multiple uses (typically residential and commercial) within a single building or development, and the financing options reflect this complexity.
Permanent Loans (Stabilized Properties): For existing mixed-use buildings with strong occupancy across both residential and commercial components, permanent loans offer fixed rates for 5 to 10 years with 25 to 30 year amortization. Lenders evaluate the blended income stream from all uses and typically prefer properties where the residential component represents at least 50% of the total.
Bridge Loans (Value-Add Properties): Bridge loans provide 12 to 36 months of short-term financing for mixed-use properties that need repositioning, renovation, or lease-up. These are particularly valuable in San Jose, where older commercial buildings can be converted or expanded to include residential components under the city's mixed-use zoning provisions.
Construction Loans (New Development): Ground-up mixed-use development requires construction financing with terms of 18 to 36 months. San Jose's urban village zoning and transit-oriented development policies support new mixed-use projects, making construction lending available for qualified developers with entitled projects.
Value-Add Bridge-to-Permanent: For investors acquiring mixed-use buildings with below-market rents or deferred maintenance, a value-add strategy funded by a bridge loan can reposition the property before refinancing into permanent debt at improved terms.
SBA Loans (Owner-Occupied Mixed-Use): Business owners who occupy at least 51% of a mixed-use property can access SBA financing with down payments as low as 10%. This is ideal for scenarios like a restaurant or retail business on the ground floor with rental apartments above.
Why Is San Jose Particularly Well-Suited for Mixed-Use Development?
Several factors make San Jose one of the strongest mixed-use markets in California.
Urban Village Strategy: San Jose's General Plan designates 68 urban villages throughout the city as targeted growth areas for mixed-use development. These areas are planned for walkable, bicycle-friendly, transit-oriented communities that combine housing with employment, retail, and civic uses. The Urban Village and Mixed-Use Zoning Districts provide flexibility for high-density residential, commercial, and mixed development.
Transit Infrastructure Investment: San Jose is at the center of massive transit expansion. The Diridon Station area is being reimagined as a regional transit hub connecting Caltrain, BART (future extension), Amtrak, ACE rail, and VTA light rail. The Berryessa BART station is already operational, and additional transit improvements are planned throughout the city. Transit proximity enhances mixed-use property values and supports both residential and commercial demand.
State Legislative Support: SB 79, signed into law in October 2025, overrides local zoning limitations to allow greater heights and densities for residential development near transit stops. This legislation strengthens the economic case for mixed-use development by allowing more units per project in transit-served locations.
Google Downtown West: The 80-acre Downtown West development near Diridon Station includes 4,000+ residential units, 500,000 square feet of retail, 7.3 million square feet of office space, and 15 acres of open space, all in a mixed-use, transit-oriented format. This project sets the standard for large-scale mixed-use development in San Jose and is catalyzing similar projects throughout the Diridon area.
Demographics and Demand: San Jose's young, tech-employed population increasingly prefers mixed-use, walkable environments where they can live, work, and access services without a car. The average tech salary above $206,000 supports premium rents in amenity-rich mixed-use buildings.
How Are Lenders Underwriting San Jose Mixed-Use Properties?
Mixed-use underwriting is more complex than single-use property financing because lenders must evaluate multiple income streams, use types, and risk profiles within a single property.
Residential vs. Commercial Split: The ratio of residential to commercial space significantly affects underwriting. Properties with 70% or more residential space are often underwritten similarly to multifamily properties, which generally receive more favorable terms. Properties with higher commercial percentages face more conservative underwriting, particularly if the commercial space includes uses sensitive to economic cycles.
Income Blending: Lenders evaluate the combined net operating income from all uses but may apply different vacancy assumptions and rent growth projections to residential and commercial components. Residential components in San Jose benefit from the city's strong rental fundamentals (3.2% vacancy, 4.3% projected rent growth), while commercial components are evaluated against their specific submarket conditions.
Tenant Mix Quality: For the commercial component, lenders prefer creditworthy tenants on long-term leases. Ground-floor retail with national credit tenants (coffee shops, banks, fitness studios) strengthens the overall property underwriting. Local restaurants and boutiques may be excellent operators, but lenders view them as higher risk.
Zoning Compliance: San Jose's Urban Village and Mixed-Use zoning districts have specific requirements for density, parking, setbacks, and affordable housing. Lenders verify that existing or proposed uses comply with applicable zoning and that the property's value is supported by conforming uses.
Parking Adequacy: Mixed-use properties must balance parking needs for residential tenants, commercial patrons, and employees. Transit-served locations in San Jose may qualify for reduced parking requirements, which can improve project economics but may also concern lenders who view parking as essential to property value.
Use our commercial mortgage calculator to model different financing scenarios for your San Jose mixed-use investment.
What Are Current Mixed-Use Loan Rates in San Jose?
Mixed-use loan rates in San Jose depend on the property's use mix, occupancy, tenant quality, location, and loan structure.
Stabilized Mixed-Use (Majority Residential): Permanent loan rates range from 5.75% to 6.75% for well-occupied properties where residential units represent 70% or more of the total. These properties benefit from the favorable underwriting that strong multifamily fundamentals provide.
Stabilized Mixed-Use (Balanced Residential/Commercial): For properties with a more even split between residential and commercial uses, rates range from 6.25% to 7.25%. The commercial component's tenant quality and lease terms drive the rate premium.
Bridge/Value-Add: Bridge loan rates for mixed-use properties range from 7.50% to 9.50%, with 12 to 36 month terms and interest-only payments. These loans fund acquisitions and renovations before permanent refinancing.
Construction (Mixed-Use Development): Construction loan rates for new mixed-use projects range from 7.50% to 9.50%, with LTC ratios of 60% to 75% depending on pre-leasing activity and sponsor experience.
SBA 504 (Owner-Occupied): SBA loans for owner-occupied mixed-use properties offer rates in the low to mid 6% range with just 10% down. The borrower must occupy at least 51% of the total space.
Explore San Jose commercial loan options for additional financing structures.
Which San Jose Locations Are Best for Mixed-Use Investment?
San Jose's mixed-use opportunities are concentrated around transit corridors, urban villages, and areas with active development catalysts.
Diridon Station Area: The most transformative mixed-use opportunity in San Jose. Google's Downtown West project, combined with the Diridon Station expansion, is creating a new urban center with thousands of housing units, office space, retail, and public amenities. Properties within the Diridon influence area benefit from the infrastructure investments and employment growth Google will generate. Acquisition and development financing here is attracting capital from institutional and private investors alike.
Berryessa BART Urban Village: The Berryessa BART Urban Village Plan creates capacity for over 5,000 new homes in a mixed-use, transit-oriented format. The plan targets 25% affordable housing and envisions a walkable community centered on the BART station. Mixed-use development here benefits from direct rapid transit access to San Francisco and Oakland.
Downtown San Jose: The urban core offers established mixed-use properties and development sites. The area around San Jose State University, the SoFA district, and the revitalized San Pedro Square all support mixed-use investment. Adobe's expanded headquarters campus adds employment density that supports both residential and commercial demand downtown.
Santana Row/Valley Fair: Already one of the most successful mixed-use developments in the Bay Area, the Santana Row area continues to evolve with the addition of office tenants (Cisco relocated units here), luxury retail, and residential components. Properties in this corridor command premium pricing and attract favorable financing.
Alum Rock/East Side Corridors: The Eastside Alum Rock corridor will connect to the planned 28th Street BART station and Alum Rock Light Rail Station. This area represents a more affordable entry point for mixed-use investment, with development plans expected to be completed by 2026. Lenders view these emerging transit corridors as long-term growth opportunities.
Stevens Creek Boulevard: A major commercial corridor undergoing incremental mixed-use redevelopment as older strip-mall properties are replaced with mid-rise mixed-use buildings. The corridor's high traffic counts and proximity to Santana Row support both retail and residential demand.
What Are the Key Financing Considerations for Mixed-Use Development?
Developers pursuing new mixed-use construction in San Jose face several unique financing considerations.
Phased Delivery: Large mixed-use developments are often built and delivered in phases, with the commercial podium completed before residential floors above. Lenders evaluate phasing plans to ensure each phase is self-supporting or that the overall project generates sufficient returns.
Commercial Pre-Leasing: Lenders typically require 30% to 50% pre-leasing of the commercial component before funding construction. In San Jose's current retail market (5.2% vacancy), achieving pre-leasing targets is feasible in well-located developments, though concessions may be needed.
Residential Absorption: For rental mixed-use developments, lenders evaluate the market's ability to absorb the residential units at projected rents. San Jose's tight rental market (3.2% vacancy, 12 applicants per listing) supports rapid absorption for well-located projects.
Affordable Housing Component: San Jose's inclusionary requirements and urban village standards require affordable units in many mixed-use developments. These units generate lower rental income but may qualify the project for density bonuses, tax incentives, and public financing that improve overall project economics.
Parking Economics: Structured parking can cost $40,000 to $80,000 per space in San Jose. Transit-oriented mixed-use projects may qualify for reduced parking ratios under the city's transit parking overlay, significantly improving project economics. Lenders are increasingly comfortable with reduced parking for properties near BART and light rail stations.
How Can Value-Add Investors Reposition Mixed-Use Properties in San Jose?
San Jose's diverse commercial real estate inventory includes numerous older properties that can be repositioned as mixed-use assets to capture the growing demand for live-work-play environments.
Identifying Candidates: Look for underutilized commercial properties in urban village zones or along transit corridors. Older retail buildings, small office complexes, and light industrial properties in areas zoned for mixed-use development can be candidates for conversion or expansion.
Zoning and Entitlements: San Jose's Mixed-Use Zoning Districts (Transit Residential, Urban Residential, Urban Village Commercial) provide the framework for adding residential units to commercial properties. Work with the city's planning division early to confirm allowable density, height, and use mix for your specific site.
Financing the Repositioning: A bridge loan funds the acquisition and renovation, with a value-add strategy that may include adding residential units above existing commercial space, upgrading ground-floor retail for higher-quality tenants, renovating common areas and building systems, and adding amenities that support premium rents.
Stabilization and Refinance: Once the property is renovated and leased, refinance into permanent financing at improved terms based on the higher NOI. The value created through repositioning can be substantial, potentially allowing you to recover initial equity and generate ongoing cash flow.
What Are the Risks of Mixed-Use Investment in San Jose?
Mixed-use properties carry unique risk profiles that investors should evaluate carefully.
Management Complexity: Operating a building with both residential and commercial tenants requires different management expertise, lease structures, and maintenance approaches. Many investors hire specialized property management firms experienced with mixed-use properties to handle this complexity.
Conflicting Uses: Residential tenants and commercial tenants can sometimes conflict. Restaurants may generate noise and odors that affect residents above. Loading and deliveries for commercial tenants may disrupt residential parking. Careful design and lease provisions help manage these conflicts, but they remain an inherent challenge.
Commercial Vacancy Impact: If the commercial component experiences vacancy while the residential units remain occupied, the blended income can fall below debt service thresholds. Lenders account for this risk by requiring higher DSCR ratios (1.25 to 1.35) for mixed-use properties compared to pure residential.
Regulatory Changes: San Jose's zoning, rent control, and development regulations continue to evolve. Changes in parking requirements, inclusionary housing mandates, or commercial-to-residential conversion rules can affect property economics.
Construction Complexity: Mixed-use buildings are more complex to construct than single-use buildings. The interface between commercial and residential components, fire separation requirements, separate utility systems, and different structural loads add cost and construction time.
How Does San Jose's Transit Expansion Affect Mixed-Use Property Values?
Transit infrastructure is one of the most powerful value drivers for mixed-use properties, and San Jose has several major transit investments underway.
BART Extension: The planned BART extension to downtown San Jose will add four stations connecting Silicon Valley to the broader Bay Area rapid transit network. Properties near planned stations are already seeing increased development interest and value appreciation in anticipation of improved transit access.
Diridon Station Rebuild: The planned reconstruction of Diridon Station as a world-class multimodal hub (connecting Caltrain, BART, high-speed rail, Amtrak, and VTA) will anchor the Downtown West development and create a regional destination. Mixed-use properties within walking distance of the rebuilt station will benefit from the concentration of transit options and employment.
VTA Light Rail: San Jose's existing light rail network serves numerous urban villages and mixed-use corridors. Properties along light rail lines benefit from transit accessibility that supports reduced parking requirements and attracts tenants who value car-free or car-light living.
Transit-Oriented Development Incentives: Properties within a half-mile of transit stations can qualify for reduced parking requirements, increased density allowances, and streamlined environmental review under state legislation. These incentives improve mixed-use project economics and make financing more favorable.
Frequently Asked Questions
What is the minimum down payment for a San Jose mixed-use property loan?
For conventional commercial loans on mixed-use properties, expect a minimum down payment of 20% to 30%. Properties with stronger residential components (70%+ residential) may qualify for lower down payments. SBA 504 loans for owner-occupied mixed-use properties can reduce the down payment to 10%, though the borrower must occupy at least 51% of the total space. Bridge loans for value-add acquisitions typically require 25% to 35% equity.
How do lenders determine the value of a mixed-use property in San Jose?
Lenders use a combination of the income approach (capitalizing the blended NOI from all uses), the sales comparison approach (comparing to recent mixed-use property sales), and for newer properties, the cost approach (replacement cost minus depreciation). The income approach is primary for investment properties. Cap rates for San Jose mixed-use properties typically range from 5.0% to 7.0% depending on the use mix, location, and tenant quality.
Can I convert a commercial property to mixed-use in San Jose?
Yes, San Jose's Urban Village and Mixed-Use Zoning Districts provide pathways for converting commercial properties to mixed-use. The feasibility depends on the property's zoning designation, location relative to transit, structural capacity for adding residential floors, and compliance with the city's development standards. Working with the planning division early in the process is essential to understand allowable conversions.
What DSCR do lenders require for San Jose mixed-use properties?
Lenders typically require DSCR ratios of 1.25 to 1.35 for mixed-use properties, which is slightly higher than the 1.20 to 1.25 range common for pure multifamily properties. The higher threshold reflects the additional complexity and risk of managing multiple use types. Properties with national credit commercial tenants on long-term leases may qualify for lower DSCR requirements.
Are mixed-use properties subject to rent control in San Jose?
San Jose's Apartment Rent Ordinance applies to the residential units in mixed-use buildings if the residential portion was built before 1979. Units built after 1979 are generally exempt from rent control. The commercial component is not subject to rent control. Investors should verify the construction date and applicability of rent control before acquiring a mixed-use property, as rent control limitations affect income growth projections.
How long does it take to close a mixed-use property loan in San Jose?
Permanent loans for stabilized mixed-use properties typically close in 45 to 75 days. Bridge loans can close in 21 to 45 days. Construction loans for new mixed-use development take 60 to 120 days given the complexity of the underwriting. SBA loans generally require 60 to 90 days. Contact our team to discuss timelines for your specific mixed-use project.
Ready to Finance a San Jose Mixed-Use Property?
San Jose's commitment to mixed-use, transit-oriented development through its urban village strategy, transit investments, and supportive zoning creates a strong foundation for mixed-use investment. Whether you are acquiring an existing mixed-use building, repositioning a commercial property, or developing a ground-up project near a transit station, the right financing structure is essential.
Explore bridge financing options, learn about value-add strategies, or contact our team to discuss your San Jose mixed-use property financing needs.